Electricity demand in Canada is set to rise, both because of electrification—more technologies powered by electricity instead of other fuels—and because of new draws on the system like data centres powering artificial intelligence. 

But meeting this demand with new power supply alone risks being expensive and inefficient. Deploying more demand-side flexibility is an under-appreciated way to keep costs low for grid operators and households alike, all while improving the efficiency of the electricity system. 

As Canada’s electricity demand increases, the grid will become more “peaky”, which means electricity systems will see bigger differences between maximum and average power demand. Imagine, for example, if everyone comes home on a cold day and switches on their heat pumps and charges their electric vehicles at the same time. Utilities need to meet those spikes with enough power, or risk an unreliable grid—namely, brownouts or blackouts. 

But building new electricity supply to meet higher peaks can be expensive and would leave new generating facilities to sit idle when demand is lower. Fortunately, increasing the flexibility in the timing of electricity use—demand-side flexibility—can help meet everyone’s electricity needs at a lower cost. 

Demand-side flexibility can save customers and utilities money

Flexibility is critically important to keeping the future grid reliable and affordable. This includes supply-side solutions like batteries and hydropower, which generate electricity on demand and can balance intermittent sources like wind and solar. It also includes demand-side solutions, like shifting electricity use to when the sun shines or the wind blows, and away from peak times. 

Demand-side management is a long-standing idea that has taken on new urgency in the face of dramatically higher power demand projections and new technological solutions that offer new options for flexibility.

Flexible demand lowers spikes in energy consumption by reducing electricity use at peak times (peak shaving) or by shifting electricity use to off-peak times (load shifting). For decades, industrial customers have been flexing their demand in exchange for lower rates. A new scoping paper by the Canadian Climate Institute describes an expanding set of new options available in this space that households and businesses can use. Smart thermostats can heat and cool homes avoiding peak times, without compromising comfort. Electric vehicles can charge overnight, when demand is lowest. And virtual power plants, which use software to connect lots of small energy sources—solar panels, home batteries, electric vehicles—can act like one big power plant, storing or using energy as supply and demand ebb and flow. 

The potential benefits are significant, both for utilities and customers. 

Utilities can deploy flexible demand programs to reduce or delay the need for costly infrastructure upgrades and enable more efficient grid operation. In Australia, for example, the net benefit of demand flexibility is estimated to be the equivalent of about CAD$7 billion to $17 billion. Utilities can also deploy flexible demand programs faster than adding new generation, a crucial advantage amid supply chain delays for power plant parts and grid components. 

Customers can cut their bills by joining programs that incentivize shifting or reducing their energy usage. Ontario’s Ultra-Low Overnight rate, for example, offers substantially lower electricity rates for customers who can shift their demand overnight. Doing so can let some electric vehicle owners fully recharge for less than $5. 

But even customers who don’t flex their demand stand to gain, as all ratepayers benefit from a more cost-effective grid. If system-wide savings keep the cost of electricity lower, more customers will electrify, making the energy transition faster and more affordable. 

Pilot programs show promise across the country. BC Hydro’s Peak Saver program offers customers rewards for enrolling smart devices that automatically reduce usage during peaks. Hydro-Québec’s Hilo program also automates smart devices like thermostats and electric vehicle chargers, saving a total of 2,330 megawatts (MW) and rewarding participating customers with an average of $205 in 2024-2025. In Ontario, the Independent Electricity System Operator’s Peak Perks program was expected to deliver over 200 MW in summer 2025—a good first step, but a drop in the ocean compared to the 2.8 gigawatts (GW) it could be saving, according to 2022 modelling. Overall, Canada is leaving value on the table by not adopting demand-side flexibility initiatives more broadly. 

Canada has barely scratched the surface of demand-side flexibility

Policy change can help to unlock more benefits. Federal and provincial governments should ramp up ambition for demand flexibility as part of clean electricity policy—integrating it into energy roadmaps, setting ambitious targets, and scaling from pilots to permanent programming. Provincial governments can also update regulation to require utilities to assess the value of demand flexibility—and deploy it. British Columbia’s Clean Energy Act, for example, now mandates BC Hydro to offer demand-side measures to its consumers and report on its progress annually.

Utilities, too, have a role to play in making it easy and rewarding for customers to participate—programs where actions are automated achieve far greater reductions than those relying on manual actions.

Not only is flexing demand possible, it’s already happening. Programs are saving money for those who participate, making the grid more cost-effective overall, and reducing or delaying the need for costly infrastructure upgrades.

If governments are serious about electrifying the economy in a way that maintains reliability, affordability, and low-emissions they should make demand flexibility a top priority.